## Facts

- Leon G. Grieb operated a general contracting business and incorporated it in 1943 as Victory Builders, Inc., a Wisconsin corporation.
- Grieb owned virtually all of Victory’s stock, served as president, and acted as a director; in practice, contracting parties often dealt with him personally rather than the corporation.
- Victory filed a corporate income tax return for 1949.
- On January 2, 1953, the Commissioner determined Victory owed additional 1949 income tax plus additions to tax and interest totaling $1,477.32.
- In January 1953, Victory liquidated and distributed its assets to Grieb, who transferred them into a new sole proprietorship.
- Grieb used former corporate funds to pay corporate creditors, including claims subordinate to the United States’ tax claim, and did not pay the corporation’s federal tax liability.
- The limitations period for asserting transferee liability had expired, so the IRS proceeded against Grieb as an alleged fiduciary under § 311(a)(2) of the Internal Revenue Code of 1939.
- Grieb did not dispute the correctness of the underlying corporate tax liability; the dispute concerned only whether he was personally liable as a fiduciary.

## Issues

1. Whether a controlling shareholder/officer who receives corporate assets in liquidation becomes a “fiduciary” within the meaning of § 311(a)(2) of the 1939 Code, making him personally liable for the corporation’s unpaid tax, penalty, and interest.
2. Whether state law created an express trust or similar fiduciary relationship requiring the shareholder to apply liquidated corporate assets to creditor claims, including the United States’ tax claim.

## Decision

- The Tax Court held that Grieb was not liable as a fiduciary under § 311(a)(2).
- The Commissioner’s determination imposing fiduciary liability for Victory’s unpaid tax, additions to tax, and interest was not sustained.
- The court treated the IRS theory as an attempted substitution for an expired transferee claim rather than a valid basis for fiduciary liability.

## Legal Principles

- Section 311(a)(2) provides a collection mechanism against persons liable “as a transferee or fiduciary,” but it does not itself create substantive liability; liability depends on applicable law and the capacity in which the person holds the assets.
- “Fiduciary” for § 311(a)(2) purposes generally refers to a legally recognized fiduciary status (e.g., trustee, executor, administrator) rather than a shareholder/officer who controls or receives corporate assets in liquidation.
- A liquidating distribution to a shareholder may support transferee-type theories, but expiration of the transferee limitations period does not permit recasting the same facts as fiduciary liability.
- Payment of lower-priority debts ahead of the United States does not establish fiduciary status absent a legally cognizable fiduciary relationship under relevant law.

## Conclusion

The Tax Court refused to impose § 311(a)(2) fiduciary liability on a controlling shareholder/officer who received corporate assets upon liquidation, holding that his role did not constitute a fiduciary capacity under applicable law and that the IRS could not recharacterize a time-barred transferee claim as fiduciary liability.


Grieb v. Commissioner, 36 T.C. 156 (1961)